CA Economic Summit urges Legislature to act on housing “package,” highlights what must come next

The California Economic Summit urged the Governor and Legislature in a letter today to move forward with a housing package aimed at several “critical components” of the state’s housing shortage—including funding for affordable housing and streamlining of local housing approvals. The Summit also highlighted several “major, unresolved policy issues” that have not been addressed by the more than 40 housing bills still moving through the Legislature—and that the Summit believes must be a major focus for policymakers next year.

“The Legislature has reached a critical juncture in its efforts to make housing affordable for more Californians, and we believe substantial and important progress can be made over the next few weeks toward expanding the state’s housing supplies, especially homes affordable to lower-income families and workers,” the Summit says in the letter, which was signed by the co-leads of the Summit Housing Action Team: Ray Pearl, executive director of the California Housing Consortium, and Cathy Creswell, former acting director of the Department of Housing & Community Development.

The letter focuses on several key bills being considered as part of a housing “package” outlined by the Governor and legislative leaders earlier this summer. “We encourage state leaders to act quickly on proposals promoted in July…providing crucial funding for housing affordable to lower-income households—SB 2 (Atkins) and SB 3 (Beall)—and testing some innovative ideas for connecting state housing goals with accelerated local approvals, e.g. SB 35 (Wiener).”

In several other communications this year (most recently here), the Summit has highlighted dozens of other bills still moving through the Legislature that could advance elements of its One Million Homes Framework, an action plan highlighting the interconnected policy changes that must be made to increase housing supplies of all types on a massive scale. The Governor’s housing “principles,” released in January, have encouraged a similar approach, emphasizing the need to streamline local approvals, lower per-unit costs, provide incentives to jurisdictions that meet their housing goals, and increase accountability and enforcement of state housing laws.

“Progress can—and should—be made this year on these issues,” the Summit said today, urging the Legislature to “stay the course” and move ahead with legislation crafted this year that can make “significant progress toward addressing the state’s shortage of one million housing units.”

The letter also highlights what must come next, after this year’s housing efforts. “State leaders must also recognize how much more there is to be done, including three major, still-unresolved policy issues at the heart of the housing crisis—which have been highlighted in both the Summit Framework and the Governor’s principles:"

"First, finding ways to contain the growing costs of housing development (especially the rising infrastructure-related fees that make many housing projects infeasible or unaffordable). Second, further streamlining the housing approval process (to accelerate construction timelines for all housing types and reduce uncertainty associated with abuses of the California Environmental Quality Act). And third, providing jurisdictions that approve new housing with a greater share of property tax revenues that go with it (funds that are needed to help communities pay for the infrastructure and services associated with new homes).”

While some new enforcement mechanisms are being considered this year, the letter also encourages state leaders to “find ways to more comprehensively address the problems created by jurisdictions that fail to plan for and approve their fair share of new housing—and that are shifting their responsibilities on to neighboring towns and regions, while exacerbating statewide transportation and infrastructure challenges.” (As there is every year in California, a lot of that has been going on lately.)

A place to start: AB 879

As the Summit continues to assess progress toward the One Million Homes Challenge, there may be an opportunity at hand to advance new ideas around cost containment, fiscal incentives, and increased streamlining. Today’s letter highlights the potential of AB 879 (Grayson), in particular, which would require new, regular local assessments of “constraints” placed on home construction, while also directing the Department of Housing & Community Development to conduct a study, by 2019, evaluating “the reasonableness of local fees charged to new developments.”

The Summit has focused for several years on the fiscal disincentives facing communities when they consider new housing—and the rising reliance on fees that drive up housing costs. The new HCD study will provide an opportunity for the Summit to work with state and local policymakers to consider ideas for retooling a fiscal system that makes it so difficult for many local governments to respond effectively to the housing crisis.

The Summit’s goal is a targeted incentive system that reduces the impact of infrastructure-related fees, provides more property taxes to jurisdictions approving housing, and expands the state’s role in assisting local governments willing to expand housing supplies.

There is work to be done in the meantime, of course.

“We hope state leaders will move forward with the wide range of bills that address a piece of the housing crisis this year—and approve critically needed funding, in particular,” the Summit letter concludes. “We also encourage you to take advantage of this momentum—and to maintain the sustained, continuing commitment that will be needed to do what must be done to ensure all Californians have access to more affordable housing.”

To read the full Summit letter to the Governor and Legislature, please click here. The Summit’s housing letter from April 7 is here and from July 11 is here.